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Copyright: Toni Straka, 2005-2011 This blog is for information and entertainment purposes only. Under no circumstances does this information represent a recommendation to buy or sell securities or any other type of investment instruments.

Wednesday, March 25, 2009

While my favourite bloggers that can be found in the blogroll in the sidebar have been poring justified criticism on the latest trillion-of-the-week adventure mov(i)e starring Ben Bernanke and Tim Geithner, my concerns focus on the entirely new situation within the European Union.The resignation of the Czech government makes the EU now not only clueless in the fight of the current crisis but also headless.Given the recent reserve in the Czech Republic towards the Lisbon Treaty, which has not been ratified by the Czech Republic, Germany, and Ireland until now, this country in the center of Europe could become a stumbling block to the Lisbon Treaty which is pushed forward by the EU who says there is no alternative to it.While the EU is officially speechless until now, a check of the latest press releases at Wednesday lunchtime showed, prime minister Miro Topolanek had posted a few sentences by himself and the EU on the Czech's EU presidency website:

Czech Prime Minister Mirek Topolánek accepted the result of the vote in which the Chamber of Deputies expressed no confidence in his Government."I will adhere to the constitutional order", stated Mirek Topolánek.According to the Constitution of the Czech Republic, the Prime Minister now has to submit his resignation to the President. The President will then decide on the appointment of a Prime Minister who will form the new government. At the moment this situation has no effect on the role of the President of the European Council held by the President of the strongest party in the Parliament.

The EU said in the same statement,

According to the treaties, the Council Presidency is held by the Member State which is represented by its competent governmental authorities under national constitutional law. The Commission has full trust that the national constitutional law allows for the Czech Republic to continue conducting the Council Presidency as effectively as it has done until now. It is for the Czech Republic's democratic process under the constitution to resolve the domestic political issues; the Commission is confident that this is done in a way which ensures the full functioning of the Council Presidency.

This development comes at a time when the EU wants to take significant legal steps to alleviate the current economic crisis, the worst in the history of the EU.The Financial Times has the following as its top story (excerpts.)

The Czech government collapsed on Tuesday night after losing a vote of confidence over its handling of the economic crisis.The 101-96 vote marks the end of the coalition government of Mirek Topolanek, the centre-right prime minister, as well as the effective conclusion of the already bumpy and crisis-ridden Czech presidency of the EU, which formally expires on June 30.The initiative (to form a government) now passes to Vaclav Klaus, the euro-sceptic Czech president, who will have to name a caretaker administration to govern the country. If three attempts to form a new government fail, then new elections are called.The difficulty in forcing new elections raises the possibility that a technocratic government will limp along in power until the next election, set for June 2010.That would leave Prague ill-prepared to deal with the fall-out from the economic downturn, which is hitting the export-orientated Czech economy with increasing force. In a recent interview with the Financial Times, Zdenek Tuma, the governor of the Czech central bank, said the economy could shrink by as much as 2 per cent this year if the situation did not improve in western Europe.Mr Topolanek had resisted calls to increase spending, arguing that the government did not have the wherewithal to bail the country out of the recession. However, that approach was unpopular with the left-leaning Social Democrats, and helped galvanise opposition.The final straw was a domestic political scandal relating to accusations of inappropriate pressure to force a television station to stop a story criticising an opposition MP who had joined the government side.

Topolanek had survived four no-confidence votes before. At present the opposition Social Democrats lead Mr Topolanek’s Civic Democrats (ODS) in opinion polls.The vote comes ahead of a visit to Prague next month by US president Barack Obama.Are the Wheels Falling Off the EU Cart?What's at stake now is the whole future of the EU that depends on the ratification of the Lisbon Treaty in Germany, the Czech Republic and Ireland. In Germany ratification depends on a ruling of the Constitutional Court and in Ireland the people is massaged into a yes-vote at the next referendum after they failed to vote as the EU rulers had expected. Ireland's constitution requires a referendum on such big changes in its sovereignty.

Having read the full text of the Lisbon Treaty I understand their distrust. Not entering an endless excourse on the Treaty (wikipedia) my main concern is the future target of a EU military.No War Please, We Are Neutral AustriansAs an Austrian, where neutrality is anchored in the constitution since 1955, I admire the 200 years of peace neutral Switzerland has been enjoying and oppose any partaking in any military bloc where Austrian kids would have to die for somebody else's cause.While the French government changed the constitution after their people said "non" and still voted for the Lisbon Treaty in parliament, Austrian government never let its people choose about the doubtful give-away of such relevant sovereign interests like justice and defense. I am therefore all the more grateful that there are still 3 possibilities to block the Treaty that had also been rejected by the Dutch people who were overruled by their own government too. If the democratic process for a less democratic Europe already started with overruling those who elected their respective governments who betrayed their will, this is certainly not a good start at all.Will the EU Fail Again in Crisis Management?As can be seen in the unfolding grand depression the EU had been clueless until things began to fall apart. Standing at its biggest crossroads ever the EU might regret never to have developed a plan "B" to their vision of a further centralized Europe that eats away on local sovereignty to the point where it becomes micro management by an octopus-like anonymous force in Brussels as opposed to the free market idea that should be the guideline for Europe.Daily rises in economic hardship will not favor a European Union - I preferred the European Community which I once voted for - as national interests will collide everywhere. When there is nothing left to distribute from empty state coffers EU members will jealously watch every move in Brussels that could be to a regional disadvantage.Cooperation could be never more valuable than now, although. The East Asian power houses begin to demand a bigger role in world politics as they watch the Western capitalist experiment failing due to the inherent problems of all systems: corruption and cronyism.But I would prefer to see cooperation in economic and social affairs and backlist a EU military force to the last place of the EU's tasks. We don't need no more possible warlords who lead our children into death while telling us it is for our own good. Civilization has always developed best in times of social peace but never during wars. Let's put our priorities there, please. Maybe a new Lisbon Treaty with a priority on social issues would also find the nods of the 500 million Europeans that will be governed by it.The EU may soon face the biggest problem in its history. Not only will it be clueless and headless but direction-less as well. A vacuum of political will may then result in the partial dissolution of the Eurozone first. Despite several summits the EU has not yet come forward with a plan to solve the financial and economic crisis. This is simply for the reason that any solution would mean that some EU members would have more on the plate than others in times when there is nothing left to distribute. Expect the situation to worsen with every day no solution to Europe's financial crisis is found.

This post is part of my contributions to TH!NK ABOUT IT, a blogging competition in the forefield of the EU election in June.

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About Me

I am an INDEPENDENT Certified Financial Analyst who worked as a financial journalist for 15+ years and now evaluate global market trends. Analyzing financial and political news permanently I want to share my insight with those who understand that we are in an era of global redistribution of wealth. The US-European centric approach does not work anymore. 6 billion people in the developing countries now demand their fair share of the world's resources.
Having worked many years for a leading newswire I have learned to understand the fatal concept of ever expanding credit by heart. If you want to learn about the future of the economy, study history.